Maximum Price

It is known as maximum price or price ceiling when the government sets a maximum legal limit of a price of a particular good or service. For this to have an effect on market, the price ceiling must be placed below the natural market price. This normally leads to a shortage – the quantity demanded will be greater than the quantity supplied.

Joint demand means two or more goods are demanded together. To consume one good, you need another good. In other words they are complements. For example, if the demand for tea increases, the demand for sugar will also increase. Here tea and sugar are complements.

Another good example of joint demand is, printers and ink cartridges. You might have noticed that some models of printers with very high functionality are sold at a very cheap price. You may think that the printers are of lower quality or produced with cheap labour.

The word equilibrium means at rest. Equilibrium in the market is the combination of price and quantity from which there is no tendency for buyers or sellers to move away. In a graphical representation, equilibrium means the intersection point of the supply and the demand curves.

Equilibrium Price or Market Clearing Price is the price at which the quantity demanded of a good equals the quantity supplied.

Goods and services can be classified into various categories based on their nature of scarcity.

Free Goods

A free good is available in abundance to people. Consumption of a free good does not arise in an opportunity cost.
Examples of free goods are air, water etc. Sometimes, a good maybe a free good in one country where as it may become an economic good in another country in which the consumers have to pay to use it.